Most consumers are well aware of how to find their credit report and credit scores. However, many small business owners have no idea how to determine if their business has a credit report or credit rating, and if so, what credit rating has been assigned to their business.
A business has credit history and credit rating just like a consumer. When someone starts a business they create a new entity that is separate from them personally. This new entity may enter into contractual obligations on its own, and incur debt based on its own creditworthiness.
Information about business credit is gathered by the several different agencies to create a business credit profile. Instead of being tracked by a social security number, a business will be tracked by an Employer Identification Number (“EIN”). The EIN acts in a similar way to the social security number with respect to credit tracking, and can be acquired simply by visiting the IRS website at www.IRS.gov and clicking the request EIN link on the small business menu.
There are four main credit bureaus that track business credit: (1) Dun & Bradstreet; (2) Experian Business; (3) Equifax Business; and (4) Infogroup, Inc. These business credit bureaus create a credit report of a businesses’ credit history. Reports from these four agencies may be used by lenders to determine whether a certain business qualifies for a business loan or line of credit, or by a trade vendor to determine whether to extend a trade credit to a certain business.
Business Credit Bureaus
- Dun & Bradstreet – Dun & Bradstreet is the recognized leader in the business credit information industry, with over 140 million companies listed. Dun & Bradstreet credit reports can be acquired online at www.smallbusiness.dnb.com. Their most popular business credit profile is known as the BIR, or Business Information Report. Dun & Bradstreet provide a business credit score, and a score greater than 75 is considered a “good” business credit rating. Registration will be required and they offer a variety of credit tracking products for a fee, with the simplest credit report costing around $60.00 USD.
- Experian Business – Experian Business can be found online at www.experian.com/small-business, and Experian Business also provides a wide variety of credit tracking products for a fee. Experian Business’ most popular business credit report is known as the CreditScore Business Report, and costs $29.95 USD. Experian Business also assigns a business credit rating score, and a score greater than 90 is considered “excellent.”
Getting a business listed with Experian Business is difficult, as they do not accept self-submitted trade information directly from the subject business, only from other vendors or trade associations that have done business with the subject business.
- Equifax Business – Equifax Business can be found online at www.equifax.com/small-business, and Equifax Business provides a basic comprehensive business credit report for $49.95 USD. Registration is required, and there is also several different credit tracking products provided by Equifax Business.
Equifax Business provides a two score system for businesses. The first score is a “credit risk” score, and is used like a typical consumer credit score. The score ranges from 101 – 992, with the higher number being the better creditworthiness. The second score, known as the “business failure” score, is an estimation as to the likelihood of the businesses’ failure in the next twelve (12) months. This business failure score ranges from 1,000 to 1,880, with the higher number signifying the less likely the business will fail during the twelve (12) months succeeding the report date.
As with Experian Business, getting a business listed with Equifax Business is difficult, as they also do not accept self-submitted trade information directly from the subject business, only from other vendors or trade associations that have done business with the subject business.
- Infogroup, Inc. – Business credit report information from Infogroup, Inc. can be attained by visiting their website at www.credit.net, and registering as a new user. As with the previously described agencies, Infogroup only provides information about a businesses’ credit history for a fee. Business credit reports provided by Infogroup, Inc. tend to be utilized less by lenders than reports from Dun & Bradstreet, Experian Business and Equifax Business.
Many small businesses will find that no credit history exists for their business, even if the small business has been operating for a number of months or years. Information is provided to these business credit tracking agencies voluntarily, and these agencies may never receive information about a particular small business.
Further, information found on a businesses’ credit report may be inaccurate, and should be reviewed carefully for inaccuracies to be disputed with the appropriate agency. Just like with personal consumer credit, a businesses’ credit report and score can have a substantial impact on the businesses’ ability to attain credit and financing, and should be carefully monitored for changes and inaccuracies.